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States Set 2023 Legislative Priorities Amid New Federal Landscape

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Most states will begin new legislative sessions in 2023. Drug pricing, patient affordability, and coverage protection will be priorities in many states.

For most states, 2023 will mark the beginning of a new legislative session, ushering in new healthcare priorities for lawmakers. As the federal government enacted major legislation in 2022 with the passage of the Inflation Reduction Act (IRA) and continues to address the public health emergency (PHE), state policymakers are likely to seek their own substantive legislative reforms related to prescription drug pricing, patient affordability, and accessible coverage.

Prescription Drug Pricing

While previous state efforts to control prescription drug prices were set on increasing price transparency and reporting within the drug supply chain, recent legislative efforts have focused on establishing prescription drug affordability review boards (PDABs) and setting upper payment limits (UPLs) for prescription drugs deemed unaffordable by the state boards. In 2022, several states considered PDAB and UPL legislation. Seven states have enacted PDABs into law, including 4 with UPLs.

Additionally, the passage of the IRA may serve as an opportunity for states interested in enacting PDABs and UPL legislation. Under the IRA, the federal government may negotiate the price of select drugs in the Medicare program. States may seek to use these negotiated prices as reference rates for state UPLs. The IRA also establishes inflation penalties for certain products that have prices that rise faster than the rate of inflation. State lawmakers could also consider inflation penalties as part of their UPL legislation. Influenced by these IRA provisions, additional states may consider PDAB and UPL bills in their 2023 legislative sessions.

Copay Adjustment Programs and Patient Affordability

Following enaction of the IRA’s cap on Medicare patients’ out-of-pocket costs, patient affordability of prescription drugs will continue to drive legislation for state-regulated commercial plans. Manufacturers often offer copay assistance programs to commercially insured patients to reduce patients’ out-of-pocket drug spending. Copay adjustment programs (e.g., accumulators, maximizers) prevent this third-party assistance from counting toward patient’s deductibles and maximum out-of-pocket calculation as it otherwise would have without an adjustment program.

From 2021 to 2022, seven states enacted bans on copay adjustment programs, doubling the total number of states with copay adjustment program bans to 15. In recent years, the federal government has also attempted to address the issue of copay adjustment programs by introducing the “Help Ensure Lower Patient” Copays Act in Congress. Copay adjustment program use, in states without bans, continues to grow in the state-regulated commercial markets, especially for specialty drugs, making the affordability of drugs and access to copay assistance programs a key issue for state lawmakers in 2023.

Access and Coverage Amid the End of the PHE

Barring major changes to the trajectory of the pandemic, the PHE will likely expire in 2023. Over the course of the COVID-19 pandemic, the Centers for Medicare & Medicaid Services (CMS) have approved a record number of state flexibilities for healthcare payers, providers, and other stakeholders. These changes to access and coverage for individuals will lead to a considerable process for “unwinding” when the PHE ends. One important area for state lawmaker consideration is how post-PHE redeterminations of Medicaid eligibility may change patient coverage options. Enrollment in Medicaid and the Children’s Health Insurance Program has increased since the start of the pandemic to 90.5 million individuals as of August 2022, an increase of over 19 million people since February 2020. The large changes in enrollment may partially stem from eligibility changes, such as continuous enrollment without eligibility redeterminations, offered under the Families First Coronavirus Response Act during the PHE. However, as the PHE ends, state Medicaid programs will begin the redetermination process for all Medicaid enrollees, which may lead to a significant number of enrollees losing eligibility for coverage. In 2023, state lawmakers will be facing decisions on how their state plans account for continued healthcare coverage burden that may fall on exchanges.

Additionally, CMS approved multiple changes to the use of telehealth and prior authorization in state Medicaid programs during the PHE, including through broader reimbursement for telehealth services and flexibility in how and when prior authorization must occur. Once the PHE ends, many of the waivers allowing these flexibilities will expire and lawmakers may seek to extend these flexibilities during 2023 sessions.

How Avalere Can Help

As the federal healthcare policy landscape undertook major movement in 2022, state lawmakers are likely to enact their own legislative priorities in response. Stakeholders should anticipate legislative changes related to these areas and plan proactively for shifts in 2023. To hear how Avalere’s policy experts and subscription products can support your state tracking, advocacy, and strategic planning efforts, connect with us.

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